Inflation brings South Korea grocery wars to boil

E-Mart

23/08/2022 05:33

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are their own.)
    HONG KONG, Aug 23 (Reuters Breakingviews) - Soaring food
prices may send South Korea's hyper-competitive retailers past
boiling point. Instead of passing on higher costs to shoppers,
discount chain Homeplus has sparked a price war in fried
chicken, according to media reports https://www.bloomberg.com/news/articles/2022-08-22/inflation-triggers-fried-chicken-price-war-in-south-korea?srnd=premium-asia.
 It's a shrewd way to win over bargain-hunters but risks pecking
away at the sector's thin margins. 
    Overall consumer inflation hit a near 24-year high in July
 urn:newsml:reuters.com:*:nL1N2ZD2NG; of that, prices of food and non-alcoholic
beverages jumped 8% year-on-year. Diners are flocking to cheaper
options: Instant-meal sales grew 30% at convenience store
operator GS25 year-on-year in the January to May period, for
example, while peers have experienced similar increases,
according to Reuters.  urn:newsml:reuters.com:*:nL4N2YD02E
    Retail giants are responding. E-Mart  139480.KS , one of the
country's largest supermarket chains, last month launched an
aggressive sales campaign that boasts the lowest prices for some
three dozen essential items like eggs and kimchi. That will keep
pressure on loss-making online rivals Kurly, which is gearing up
 urn:newsml:reuters.com:*:nL1N2ZY0EF to go public, and the $32 billion Coupang  CPNG.N ,
whose New York stock has nearly halved over the past 12 months.
Simmering price wars risk giving investors indigestion. (By
Robyn Mak)
    
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 (Editing by Antony Currie and Katrina Hamlin)
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